lOMoAR cPSD| 37668344
CENGAGE NOW TESTS ANSWER FOR SOUTH-
WESTERN FEDERAL TAXATION 2024, CORPORATIONS,
PARTNERSHIPS, ESTATES AND TRUST 47TH EDITION BY
WILLIAM RAABE
,Complete the statements below regarding tax legislation.
When enacting tax legislation, Congress is often guided by the concept of revenue neutrality so that any changes
neither increase nor decrease ✔ the net revenues raised under the prior rules. Revenue neutrality does not ✔ mean that
any one taxpayer's tax liability remains the same.
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The foundation of any tax system has to be the raising of revenue to absorb the cost of government operations.
Post-Submission
Answers: neither increase nor decrease; does not.
Ideally, annual outlays should not exceed anticipated revenues. This situation leads to a balanced budget with no deficit. Many states have
achieved this objective by passing laws or constitutional amendments precluding deficit spending. The Federal government has no such
prohibition.
When enacting tax legislation, Congress is often guided by the concept of revenue neutrality so that any changes neither increase nor
decrease the net revenues raised under the prior rules. Revenue neutrality does not mean that any one taxpayer's tax liability remains the
same. Because this liability depends upon the circumstances involved, one taxpayer's increased tax liability could be another's tax saving.
Revenue-neutral tax reform does not reduce deficits, but at least it does not aggravate the problem.
Solution
Tax Drill - Tax Legislation
Complete the statements below regarding tax legislation.
When enacting tax legislation, Congress is often guided by the concept of revenue neutrality so that any changes
neither increase nor decrease the net revenues raised under the prior rules. Revenue neutrality does not mean that any one
taxpayer's tax liability remains the same.
1. DRILL.role.of.1he.cour1s
Tax Drill - Role of the Courts
Indicate whether the following statements are "True" or "False" regarding the role of the courts in interpreting and shaping tax law.
a. A leading tax concept developed by the courts deals with the concept of substance over form. True ✔
b. The continuity of interest concept originated with the courts but has, in many situations, been incorporated into True ✔
statutory provisions of the tax law.
c. Some court decisions have been of such consequence that Congress has incorporated them into statutory tax law. True ✔
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The Federal courts interpret statutory provisions and the administrative pronouncements issued by the IRS.
Post-Submission
Answers: True; True; True.
In addition to interpreting statutory provisions and the administrative pronouncements issued by the IRS, the Federal courts have
influenced tax law in two other respects. First, the courts have formulated certain judicial concepts that serve as guides in the application of
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various tax provisions. Second, certain key decisions have led to changes in the Internal Revenue Code. Understanding this influence helps
explain some of our tax laws.
a. A leading tax concept True. Although ranking the tax concepts developed by the courts in order of importance is
developed by the courts deals difficult, the concept of substance over form would almost certainly be near the top of any list.
with the concept of substance Variously described as the "telescoping" or "collapsing" process or the "step transaction
over form. approach," it involves determining the true substance of what occurred. In a transaction involving
many steps, any one step may be collapsed (or disregarded) to arrive directly at the result
reached.
True. Primarily concerned with business readjustments, the concept permits tax-free treatment
b. The continuity of interest
only if the taxpayer retains a substantial continuing interest in the property transferred to the
concept originated with the
new business. Due to the continuing interest retained, the transfer should not have tax
courts but has, inmany
consequences because the position of the taxpayer has not changed.
situations, been incorporated
into statutory provisions of the True. Court decisions sometimes create uncertainty about the tax law. Such decisions may reach
tax law. the right result but do not produce the guidelines necessary to enable taxpayers to comply. In
c. Some court decisions have been many situations, Congress may be compelled to add certainty to the law by enacting statutory
of such consequence that provisions specifying when a particular tax consequence will or will not materialize.
Congress has incorporated them
into statutory tax law.
Solution
Tax Drill - Role of the Courts
Indicate whether the following statements are "True" or "False" regarding the role of the courts in interpreting and shaping tax law.
a. A leading tax concept developed by the courts deals with the concept of substance over form. True
b. The continuity of interest concept originated with the courts but has, in many situations, been incorporated into True
statutory provisions of the tax law.
c Some court decisions have been of such consequence that Congress has incorporated them into statutory tax law. True
2. DRILL.in1erpre1ing.1ax.law
Tax Drill - Interpreting Tax Law
Complete the statement below regarding tax law.
A leading tax concept developed by the courts deals with the interpretation of statutory tax provisions that operate to benefit taxpayers.
The courts have established the rule that these relief provisions are to be narrowly ✔ construed against taxpayers if there is any
doubt about their application.
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In addition to interpreting statutory provisions and the administrative pronouncements issued by the IRS, the Federal courts have
influenced tax law in two other respects. First, the courts have formed certain judicial concepts that serve as guides in the application of
various tax provisions. Second, certain key decisions have led to changes in the Internal Revenue Code.
Post-Submission
Answer: narrowly.
In addition to interpreting statutory provisions and the administrative pronouncements issued by the IRS, the Federal courts have
influenced tax law in two other respects. First, the courts have formulated certain judicial concepts that serve as guides in the application of
various tax provisions. Second, certain key decisions have led to changes in the Internal Revenue Code. Understanding this influence helps
explain some of our tax laws.
The courts have established the rule that these relief provisions are to be narrowly construed against taxpayers if there is any doubt about
their application. Suppose, for example, that Beige Corporation wants to be treated as an S corporation but has not satisfied the statutory
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requirements for making the required election. Because S corporation status is a relief provision favoring taxpayers, chances are the courts
will deny Beige Corporation this treatment.
Solution
Tax Drill - Interpreting Tax Law
Complete the statement below regarding tax law.
A leading tax concept developed by the courts deals with the interpretation of statutory tax provisions that operate to benefit taxpayers.
The courts have established the rule that these relief provisions are to be narrowly construed against taxpayers if there is any doubt
about their application.
3. DRILL.in1ernal.revenue.code
Tax Drill - Internal Revenue Code
Indicate whether the following statements are "True" or "False" regarding the origins of the Internal Revenue Code.
a. Before 1939, the statutory provisions relating to taxation were contained in the individual revenue acts enacted by True ✔
Congress.
b. Known as the Internal Revenue Code of 1939, the codification arranged all Federal tax provisions in a logical sequence True ✔
and placed them in a separate part of the Federal statutes.
c. A further rearrangement took place in 1960 and resulted in the Internal Revenue Code of 1960. False ✔
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The power of Congress to implement and collect taxes is summarized in the Internal Revenue Code, the official title of U.S. tax law, and it is
the basis for arriving at solutions to all tax questions. Neither the 1939, the 1954, nor the 1986 Code changed all of the tax law existing on
the date of enactment.
Post-Submission
Answers: True; True; False.
Before 1939, the statutory provisions relating to taxation were contained in the individual revenue acts enacted by Congress. The
inconvenience and confusion that resulted from dealing with many separate acts led Congress to codify all of the Federal tax laws. Known
as the Internal Revenue Code of 1939, the codification arranged all Federal tax provisions in a logical sequence and placed them in a
separate part of the Federal statutes. A further rearrangement took place in 1954 and resulted in the Internal Revenue Code of 1954.
The power of Congress to implement and collect taxes is summarized in the Internal Revenue Code, the official title of U.S. tax law, and it is
the basis for arriving at solutions to all tax questions. Neither the 1939, the 1954, nor the 1986 Code changed all of the tax law existing on
the date of enactment. Much of the 1939 Code, for example, was incorporated into the 1954 Code. The same can be said for the transition
from the 1954 to the 1986 Code.
a. Before 1939, the statutory provisions relating to True. The inconvenience and confusion that resulted from dealing with many
taxation were contained in the individual revenue separate acts led Congress to codify all of the Federal tax laws.
acts enacted by Congress.
b. Known as the Internal Revenue Code of 1939, the True. The inconvenience and confusion that resulted from dealing with many
codification arranged all Federal tax provisions in a separate acts led Congress to codify all of the Federal tax laws. Known as the
logical sequence and placed them in a separate Internal Revenue Code of 1939, the codification arranged all Federal tax provisions
part of the Federal statutes. in a logical sequence and placed them in a separate part of the Federal statutes.
c. A further rearrangement took place in 1960 and False. A further rearrangement took place in 1954 and resulted in the Internal
resulted in the Internal Revenue Code of 1960. Revenue Code of 1954.
Solution
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